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Databricks IPO: A Smart Summertime Buy?

Databricks IPO Update

Is Databricks IPO coming? There have been hints that the company wants to go public. So, let’s get down to busines.

About Databricks initial Public Offering

Databricks was set up in 2013 by the people who made Apache Spark, Delta Lake, and MLflow. Databricks is a data analytics company that uses artificial intelligence (AI) and is based in San Francisco, California.

It was the first thing in the cloud to use “lakehouse” architecture. This combines “lakes” of data, which are large amounts of unprocessed data, with “warehouses,” which are organized structures with processed data.

The Lakehouse platform is an open and unified platform for data and AI that helps businesses manage their data. Supporters say that the data warehouse may become obsolete because of the new way to store, analyze, and choose information. This is a big deal because data warehouses have been the most important part of IT plans for businesses for more than 30 years.

Databricks is used by more than 5,000 organizations in more than 12 different countries around the world. Also, the company works with more than 450 international companies to offer services on the Databricks Lakehouse Platform.

The platform from Databricks is used by more than 40% of the Fortune 500. Rarely do so many investors and businesses back the same business. The company is also on track to grow even more in 2022.

Databricks is on track to bring in $1 billion by 2022

Many businesses have moved online in the past two years, which has been great for tech companies. And Databricks also got something out of it. Databricks’ annual recurring revenue grew by more than 75 percent from 2019 to 2020, passing $425 million. Also, annual recurring revenue went up even more to $800 million in 2021.

Reports say that the COVID-19 pandemic made companies want to learn more about cloud-based analytics. This is coming true, as the company is on track to bring in $1 billion by 2022. Pete Sonsini, who joined the board of Databricks in 2014, said that companies were in a hurry to analyze their data in the cloud…

During the pandemic, they definitely moved faster… We put money into Databricks when they had no software sales, and next year they’ll make about $1 billion in GAAP sales… There may be more.

Still, people who might be interested in betting on the Databricks IPO will want to know more about the margins that go with that number. So far, no details have come out. But the company was recently given a value of $38 billion. Investors think that a Databricks IPO is coming soon because of this number.

Databricks is valued at $38 billion

Databricks said at the end of August that it had raised $1.6 billion in a Series H round. After the funding round, the company was worth an incredible $38 billion, making it one of the most valuable private companies. This valuation came just seven months after Databricks got a $28 billion valuation from a $1 billion Series G funding round.

The last fiscal year for Databricks ended in September 2021, with $425 million in sales. This is an increase of more than 75 percent from last year. But Databricks doesn’t talk about how much money it makes. So, it’s not known if the company is making money, and any numbers that might exist about making money are just guesses.

Ali Ghodsi, co-founder and CEO of Databricks, spoke out after a recent funding round gave the company a $38 billion value.

“This new investment is a reflection of the rapid adoption and incredible customer demand we’re seeing for the Databricks Lakehouse Platform and underscores the industry and investor confidence in our vision – that lakehouse is the data architecture of the future… This marks a thrilling new chapter that will allow us to accelerate our pace of innovation and further invest in the success of data-driven organizations on their journey to the lakehouse.”

Investors have given the company almost $3.6 billion in money. Also, Amazon (Nasdaq: AMZN), Microsoft (Nasdaq: MSFT), Alphabet (Nasdaq: GOOG), and Salesforce, the four largest cloud providers, all back the company (NYSE: CRM). Also, investors think that a Databricks IPO could happen soon because of the most recent capital raise.

So, how much could the company get from its IPO? Let’s look at the specifics of the filing…

IPO Filing Details for Databricks

Investors are waiting with bated breath for Databricks to go public. Also, an IPO isn’t official, but it’s been said that it will yhappen in 2022. According to Reuters, Ghodsi tried to stop the rumors that the funding round had started by saying that the latest money raise “does not push back the IPO.”

But in an interview with CNBC in February, Ghodsi gave hints that he might go public. At the time, Ghodsi didn’t say whether the Databricks IPO would be a traditional IPO or a direct listing. But he gave hints that the company might go public through direct listing. After the SEC’s new rule that lets companies raise money while direct listing, this news came out.

Ghodsi was quick to point out, though, that a traditional IPO has one big advantage. It would let the company choose which new investors to take on. Since the company wants investors who are in it for the long haul, this could be better in the long run.

In short, it’s still not clear how people could buy Databricks stock. Ghodsi did say, though, that the company won’t go public through a SPAC.

Also, in an interview with Protocol from August, Ghodsi said…

“We’re going public six months at a time… Usually when you IPO, you want to make sure you are getting the long-term investors … [and] we’re basically allocating the big blocks of allocations to the big mutual funds and other investors right now.”

Many people are comparing Databricks to Snowflake Inc. (NYSE: SNOW), which went public in 2020 and was the biggest software IPO in history. If the comparisons are true, a Databricks IPO will be a very exciting one to watch out for.

Ghodsi hasn’t talked about the Databricks IPO in a while. We should, however, hear more about Databricks stock soon.

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Francesca Castillo

Francesca Castillo